Entrepreneurship & Small Business

Creating a Loyalty/Rewards Program for Customers

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  • Jul 19th, 2016 10:08 am
[OP]
Newbie
Feb 11, 2013
67 posts
2 upvotes
Newcastle

Creating a Loyalty/Rewards Program for Customers

I am thinking of implementing this into my business as I think it'll really help me retain the customers that I like to work with as well as help get me new ones if I were to throw in some sort of referral incentive. I've been researching around just to brainstorm and I have some notes and ideas I've put together, but just wanted to come here and ask fellow business owners how their experience has been if you've introduced this sort of concept. What are the best parts that have worked for you? What should you avoid when starting a loyalty program? How do you make it unique to your business?

In my industry there is a time cap for how long customers can remain my customers, so I am trying to take this into consideration. Are there some business structures where a loyalty program is just not viable (ie real estate sales)?

I searched around RFD forums and didn't find an exclusive thread about this, so perhaps if we could all chime in and toss some ideas around here we could all benefit. :D

Just to get the ball rolling, I've learned that offering just a discount isn't very promising, and also interferes for when you decide to increase prices.
"A bank is a place that will lend you money if you prove that you don't need it." -Bob Hope
"A bargain is something you can't use at a price you can't resist." -Franklin Jones
4 replies
[OP]
Newbie
Feb 11, 2013
67 posts
2 upvotes
Newcastle
Lots of views, no posts. Anyone?
"A bank is a place that will lend you money if you prove that you don't need it." -Bob Hope
"A bargain is something you can't use at a price you can't resist." -Franklin Jones
Deal Addict
Oct 29, 2010
4243 posts
609 upvotes
I also posted it in another thread but ill say again. I tried to go with a referral program that will give 50% credit to a client who sends me new clients. I'm not quite sure what it is you do but i'm in the service business.

Realistically, discount is like paper money to most people, they usually can't tell if/when it's a good value based on giving discount so i try to avoid that or minimize it to 5-10% if someone buys alot. As you pointed out, another problem with giving discount is future business, they wouldn't want to pay higher and if they refer someone to you, that new person will also want the discounted price that the current client is paying, so it's a mess.

What i try to do with my program, is only target future clients by trying to create a pyramid effect, each one brings someone else and they too have the ability to get lots of free credit by sending more people.

This way (in theory) as long as i can give good service/value to my clients, it will give them a huge incentive to bring their friends. Keep in mind that when i researched the amount other businesses give, the result is usually $10-10% and in some rare cases i've seen a $100 or $200 credit. My prices go from $100-$2000 so 50% credit should be a much better value than those.

Keep in mind that my prices are well below the average price for the same service. So people get a good price without the need for a discount though many people will try just to see if they can get a lower price anyway.
Deal Expert
Aug 2, 2001
15351 posts
5624 upvotes
Before you attempt to retain customers that you are losing you first need to understand why you are losing them in the first place. Do they leave because your services are too expensive? Inferior to others? Dislike of staff? Poor location? etc...

Without knowing why customers are leaving you it seems premature to start devising a program designed at keeping them. All you may end up achieving is giving existing customers a discount and not retaining new ones.


Once you know why customers are leaving you it seems like a good time to evaluate what the best course of action is. Perhaps there are other problems that need to be corrected first rather than providing a discount program that may prove difficult to stop, even if it's ineffective (as customers dislike losing those things).

As for attracting new customers that's a whole different story. Are you trying to attract new customers to your service that have never used a service like yours? Steal customers from another similar business? etc... Each of those goals may require a different plan of attack.


On the service many people think "If I give them discounts they will come and keep coming" but in the end that's not always the case. How many people would get their hair cut at a place that does a crappy job but offers a "buy 5 get 1 free" discount?
Newbie
Jul 18, 2016
2 posts
these days you have to have a rewards/benefits program in place to ensure customer retension

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